Course Content
What Is Forex Trading?
Forex is the world's largest market by trading volume and liquidity. Brokers, businesses, governments, and other economic agents trade currencies and forex derivatives to enable international commerce. Traders also use the market for speculative reasons. There are various arbitrage opportunities to be found with exchange rates and interest rates, making the market a popular one to trade in large volume or on leverage. The forex market consists of fiat currency pairs and their relative market prices. These pairs are typically bought and sold by the lot. A standard lot contains 100,000 units of the pair's base currency, but other smaller sizes are available, ranging down to 100 units. Traders commonly use leverage to increase the amounts they can invest with their capital. You can also offset risk by using forwards and swaps to trade a currency pair for a specific price in the future. Combining these two instruments with other trading strategies and products creates a variety of investment opportunities for forex traders.
What Is Forex Trading?
About Lesson
At the most basic level, the forex market contains pairs of currencies describing the relative price between the two. If you’ve traded cryptocurrencies already, you’ll be a bit familiar with how the FX market works. The first currency shown in a pair is the base currency. The second is the quote currency, sometimes known as the counter currency. We express the quote currency as a value related to one single unit of the base currency.

GBP/USD shows the price of £1 quoted in USD. This ratio is shown as a number, such as 1.3809, demonstrating £1 is worth $1.3809. GBP/USD is one of the most frequently traded pairs and is known as cable. This nickname comes from a transatlantic cable in the 19th century that would relay this rate between exchanges in London and New York.

When it comes to forex trading, you can find many liquid markets. Some of the pairs with the highest trading volume include USD/JPY, GBP/USD, USD/CHF, and EUR/USD. These pairs are known as the majors and consist of the US dollar, Japanese yen, British pound sterling, Swiss franc, and euro.